If Aggregate Demand Increases and Expectations Regarding Inflation Remain Constant

question 133

Multiple Choice

If aggregate demand increases and expectations regarding inflation remain constant,

• A) the economy moves along the short-run Phillips curve.
• B) the short-run Phillips curve shifts to the right.
• C) the short-run Phillips curve shifts to the left.
• D) the long-run Phillips curve shifts to the right.

---

Definitions:

Top-Down Processing

Top-down processing is a cognitive process that starts with high-level brain functions, such as expectations or prior knowledge, to interpret and perceive sensory information.

Bottom-Up Processing

An approach to processing information that starts with the sensory input and builds up to the perception of the whole.

Rationalization

The process of reorganizing a company or system to make it more efficient, often involving the simplification of processes and elimination of redundancies.

Projection

The tendency for perceivers to attribute their own thoughts and feelings to others.